Core Inflation Prints At 1.6%, Taylor Rule (Rudebusch) Flips Suggesting Fed RAISES Target Rate! (RENT CPI FALLS)

by confoundedinterest17

November core inflation (CPI Ex Food and Energy YoY) remained the same as October at 1.6%.

The Taylor Rule Model (Rudebusch specification) now suggests, a Fed Funds Target Rate of 1.66% (as opposed to the current rate of 0.25%). This is a flip from deeply negative rates to positive territory.

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On the other hand, US CPI Urban Consumers Owners Equivalent Rent of Residences YoY NSA fell to 2.3%.

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“Do I increase rates? Or keep them at 25 basis points?”